The Impact of Social Media on Business Organizations - Case Study Example

The Impact of Social Media on Business Organizations Executive Summary Social media presents a platform on which people and businesses can communicate interactively by creating, sharing and exchanging information. Its rise in usage presents both positive and negative implications for business organisations. This report has examined the impact of social media on business organisations. To begin with, it has been pointed out that the impact of social media on businesses is quite important. Studies indicate that individuals use different social networking sites for different purposes. This means that organisations need to fully understand the impact of social media on their operations before developing their social media strategies and policies. One important opportunity presented by social media is that organisations can use the social communities developed for their marketing activities. Also, organisations can use social media to develop and maintain good relationships with their stakeholders. However, social media presents the threats of reputation risk, reducing the performance of employees and risking the privacy of individual users. Concerning controversial issues, it is pointed out in the report that the privacy of users presents a key issue in the usage of social media. The amount of personal information stored in social networking sites may be accessed by unwarranted third parties. Such a scenario may present both security threats as well as loss of personal information. Table of Contents Introduction The nature of social media presents different implications for business organisations, individuals and the society in general. The ease of use, opportunities for collaboration and unlimited possibilities for networking enable businesses to build valuable networks with different stakeholders. On the other hand, businesses and the society in general may be exposed to different threats resulting from the use of social media. This report examines the impact of social media on business organisations in the current age. The report is divided into three distinct sections. In the first section, information about the relevance of social media on business organisations is presented. In the second section of the report, information concerning the impact of social media on business organisations is presented. This takes into account both the opportunities that are presented by the social media for different business organisations and the threats that exist for businesses as a result of using social media in their core operations. In third section, critical and controversial issues arising from extensive use of the social media are presented. Finally, the report presents several areas in the knowledge of the impact of social media on business organisations which require further research. Importance of this Topic The importance of understanding the impact of social media on businesses cannot be overemphasised. The use of social networking sites is on the rise. This trend bears a strong impact on businesses in several ways. From marketing, general information and corporate social responsibility practices, social media is affecting the way businesses are conducting their operations (Muller 2012, p. 5). This is a phenomenon which is not only current but also promises to affect businesses for a long time in the future. According to a research conducted by Technocratic Media on the relationship between consumers and different social networking sites, it was established that consumers follow different brands of social media sites for widely different and unrelated reasons. For instance, whereas the majority of consumers join Facebook and Twitter as a way of keeping up to date with activities and complaining about products and services, many consumers join other social networking sites such as Instagram and Pinterest in order to make purchases and learn about products and services. This kind of information is important because it helps businesses to develop the appropriate social media policies, strategies and use as a marketing tool (Chaney 2012, p. 39). Apart from this, information on the impact of social media on businesses is important in shaping the approach taken by businesses in developing their online presence. Denning (2010, p. 18) observes that the social media presents a vital tool of communication which can be used to build relations with potential customers and the general public. The usage of social media in the current society is facilitated by its ease of use, wide accessibility to the general public, the speed of communication and the ability of users to alter the content that is published through comments and editing. In recognition of this trend, many companies seek to develop their identity in the social media following progressive steps. Information about the threats and opportunities presented by social networks to businesses will help business leaders to formulate the right strategies when transforming from simple presence in the web to developing a sustainable forum for engaging their stakeholders. Impact of this Study on Business Organisations The use of the social media presents both positive and negative impacts on business organisations, industries and the society in general. This impact arises from the opportunities presented by social networking sites on one hand and the threats that arise from the use of the social media on the other. The first positive impact that social networking sites have presented to business organisations arises from the fact that social media are used as primary tools of communication. Because of this, social media sites have presented business leaders with a quick way of staying in touch with subordinates and other employees in business organisations (Vlore & Kekkonen 2012, p. 119). The advantages presented by this approach to communication within organisations are numerous. For instance, increased communication, interactivity and multimedia presence enables business leaders to communicate more effectively with their employees using social media sites. Also, staying in touch with employees via social media sites reduces the time required for employees to contact each other using traditional means (Qualman 2011, p. 47). This therefore means that social media, through its interactive framework, has changed the way communication takes place within organisations. The second positive impact that social media presents to business organisations regards access to information. According to Chikandiwa, Contogiannis and Jembere (2013, p. 368), there are billions of bits of information that are shared on social networking sites all the time. Although this flow of information is largely unstructured in the sense that control, veracity and content are largely determined by individuals, business organisations can access valuable information that exists in these sites. Richardson and Gosnay (2010, p. 35), observe that companies are able to find important information about opportunities for business, threats, complaints about products and services as well as general information about trends in the market from social networking sites. Since these sites not only present valuable information but also do so within a relatively short period of time, business organisations can use them to gain valuable information about consumer trends and the industry. The third benefit of using social media is that organisations can utilise social media as an important tool in their marketing strategies. The role of social media in marketing has received considerable academic attention. For instance, Weber (2009, p. 70), observes that traditional media has lost its ability to hold significant sway over the masses. As such, social media, with its numerous communication and innovative tools, has changed the way business organisations interact with their clients and the general population which forms a potential client base. Also, many organisations are using the social media as a way of creating and maintaining their brand awareness (Muller 2012, p. 47). This is done through fan pages and is made possible by the ease with which such groups can be formed and maintained. A case in example is the fan pages of different organisations on Facebook. For instance, the fan page for the Coca-Cola Company has a total number of fans exceeding three million individuals (Vuori & Okkonen 2012, 121). The fact that the page was started by consumers before the company expressed interest to take part in its management shows the ease, accessibility and potential use of social media as a marketing tool for organisations. Although social media presents numerous potential benefits to business organisations, the use of such sites may also prove to be detrimental. One negative impact that social networking sites present to business organisations is that increased use of social media by employees lowers the level of productivity in the workplace (Boylan 2009, p. 7). Increasing usage of these sites by employees means that the time and resources required to perform productive work for business organisations is spent on social sites. Another potential threat of social media to business arises from the relationship between social media and reputation risk for businesses. Aula (2010, p. 44) defines reputation risk for businesses as the possibility of business organisations losing control over their public image. Reputation risk is detrimental to the relationship between the business and its stakeholders as well as the operations and market performance of a business. According to Smits and Mogos (2012, p. 3), social media may contribute to reputation risk for organisations in several ways. For instance, the interactive nature of social media means that an organisation has little control over the content of conversations on such sites that are touching on its operations. This implies that an organisation is unable to react to changes in the external environment as well as the changes in the expectations of consumers and the general public (Aula 2010, p. 47). According to a research conducted by Deloitte (2009, cited by Cray 2012, p. 46), the majority of employees in the companies that were surveyed indicated that business organisations face a realistic risk of having their reputations damaged as a result of content generated by employees. Over 70% of the respondents agreed that the content generated on social media may result into harassment, defamation and other threats (Cray 2012, p. 49). This connotes that business organisations face the risk of having their reputations damaged as a result of the nature of social networking sites. Critical and Controversial Issues There are several issues related to the social media that are of critical and controversial importance to businesses, the economy and the society in general. Many of these issues arise from the fact that since the use of social media networks presents both opportunities and threats to businesses, and that the trend is still undergoing rapid development and adoption, the possibility of unforeseen impacts resulting from the trend cannot be ruled out. It is important to note that many controversial issues related to the use of social networking sites by businesses present both ethical and moral questions to businesses managers, the employees and general members of the society. The first threat that the use of social networking sites presents to businesses is related to the privacy of the users. According to Qualman (2011, p. 79), the rise of the social media bears a strong impact on the society, politics and other social issues which influence the general opinion of behaviour of individuals in the society. Since social networking sites provide open forums in which personal information is shared on the public sphere, questions regarding what kind of information should be protected or not do arise. This means that the issue of privacy in the use of social media is a controversial issue to businesses and the general society. One issue of concern about the privacy of users with regard to social networking sites is the possibility of the stored data being inappropriately made available to other institutions and individuals without permission. This information may be used for commercial or data mining purposes (Denning 2010, p. 20). Also, use of social networking sites presents the possibility of users involuntarily allow the sharing of information by other users. Such a practice may result to the private information of users being shared without their consent. Further, with the use of cookies and other technical devices, the location and other personal details of individuals can be made available to unauthorised persons (Denning 2010, p. 33). This may present the possibility of surveillance and spying on users, thus compromising not only their privacy but their security as well. Apart from issues to do with privacy, another controversial issue regarding the use of social media arises from the concept of identity and relational connections that are established with the use of these sites. Since the kind of communication that takes place in social networking sites is virtual, there is the possibility of growing intolerance between users. Although the lack of face-to-face communication in social networking sites is a matter of general controversy to the general public, the fact that the identities of users of social networking sites are virtual and are constructed based on the pre-established categories is an issue of concern to business organisations as well. This is so because businesses engaging their clients and the general public in social networking sites base their communication on the virtual identity of users. This is an issue of great concern for many social networking sites. For instance, there has been controversy about the possibility of social networking sites like Facebook and Twitter making users’ data available to third party marketing companies (Weber 2009, p. 88). Also, both sites have been victims of instances of violation of the privacy of users. An exemplar here the case where by use of survey scams, invitations and suspicious-looking links, violators have managed to access personal information of users of Facebook and Twitter. This leads to instances of identity theft, data mining and exposure to malware (Chaney 2012, p. 102). Conclusions In conclusion, the use of social media on business organisations results to both positive and negative consequences. On one side, increased use of the social media presents an opportunity for business organisations to manage their relationships with their stakeholders. Also, business organisations can use social networking sites as principal communication tools. This enables both managers and employees to stay connected. However, the opportunities presented by social media are eclipsed by possible threats to business organisations. For instance, the interactive nature of social networking sites exposes businesses to the risk of losing control over what is generated and posted on these sites. This means that businesses constantly face the threat of having their reputation damaged as a result of the content that is posted on social networking sites. Suggestions for Further Research One issue that warrants further research arises from the controversy about the role of social networking sites in influencing the productivity of employees. Since this is a contested issue, there is need for further research to be conducted on the extent to which employees’ use of the social media leads to a decline in their productivity and if so, what impact social media policies and regulations developed by organisations will have on the performance of employees. References Aula, P 2010, ‘Social media, reputation risk and ambient publicity’, Strategy & Leadership, vol. 38, no. 6, pp. 43–49. Boylan, M 2009, ‘Social media’s positive impact on business.’ Available from: http://www.google.co.ke/url?sa=t&rct=j&q=&esrc=s&source=web&cd=7&cad=rja&ved=0CG0QFjAG&url=http%3A%2F%2Fmikeboylan.com%2Fdropbox%2FSocialMedia.pdf&ei=J4aUUoH7NKqd0AXukIGwDQ&usg=AFQjCNFFQxPzmA-mHUfV00vLZ3gni4xAiQ&sig2=F5LPxxVNoN-oZBIScHPN6A&bvm=bv.57155469,d.Yms (26 November 2013). Chaney, P 2012, Social Media for Small Business: How to Build a Strategic Social Media Marketing Plan. Booktango, New York. Chikandiwa, S T, Contogiannis, E & Jembere, E 2013, ‘The adoption of social media marketing in South African banks’, European Business Review, vol. 25, no. 4, pp. 365 – 381. Cray, E 2012, ‘The social ROI: successful social media measurement from an agency standpoint’, The Elon Journal of Undergraduate Research in Communications, vol. 3, no. 1, pp. 43 – 51. Available from: https://www.google.co.ke/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&cad=rja&ved=0CDwQFjAB&url=https%3A%2F%2Fww.elon.edu%2Fdocs%2Fe-web%2Facademics%2Fcommunications%2Fresearch%2Fvol3no1%2F05CrayEJSpring12.pdf&ei=uJmUUu7qK63jsASZ1YHYAw&usg=AFQjCNE2Z1EX7_igsRAIRT94sHETx2dK5g&sig2=WOHRkvoduTuPvpsTTwE6xQ&bvm=bv.57155469,d.Yms (26 November 2013). Denning, S 2010, ‘Managing the threats and opportunities of the open organization’, Strategy and Leadership, vol. 38, no. 6, pp. 16 – 22. Muller, C 2012, The Impact of The Internet and Social Media on the Hotel Industry. GRIN Verlag. Qualman, E 2011, Socialnomics: How Social Media Transforms the Way We Live and do Business. John Wiley and Sons, Hoboken. Richardson, N & Gosnay, R M 2010, A Quick Start Guide to Social Media Marketing: High Impact, Low Cost Marketing that Works. Kogan Page Publishers, London. Smits, M & Mogos, S 2012, ‘The impact of social media on business performance’, Proceedings of the 21st European Conference on Information Systems. Available from: http://www.google.co.ke/url?sa=t&rct=j&q=&esrc=s&source=web&cd=6&cad=rja&ved=0CFIQFjAF&url=http%3A%2F%2Fwww.staff.science.uu.nl%2F~Vlaan107%2Fecis%2Ffiles%2FECIS2013-0713-paper.pdf&ei=GYiUUtHGG5WksQTPsoDgDQ&usg=AFQjCNHbrGyU9TnaANaYOAJ3AUtTy10ibA&sig2=WZQPn66FW8LaOIcm7Up9pw&bvm=bv.57155469,d.Yms (26 November 2013). Vuori, V & Okkonen, J 2012, ‘Refining information and knowledge by social media applications: adding value by insight. The Journal of Information and Knowledge Management Systems, vol. 42, no. 1, pp. 117 – 128. Weber, L 2009, Marketing to the Social Web: How Digital Customer Communities Build Your Business. John Wiley and Sons, Hoboken. Read More